Annuity vs 4% rule

[haha]

Quote:

Originally Posted by LongPrime You can make your own decisions.

Thank you, that is very kind. Otherwise I might have thought that I needed to clear my plans with you.

Ha

[LongPrime]

Quote:

Originally Posted by JPatrick The market drops in 2000 and 2008 were God's gift to annuity sales peeps. But when those portfolios got chopped in half, there were some advivors who correctly stated--STOP!!! DON'T SELL AT THE BOTTOM..STAY THE COURSE AND BUY MORE LIKE THE BIG KIDS DO. I'm sure many who took that advice could tell some sweet stories today. I know I could. But, I admit, the commisions that follow that kind of advice are on the meager side.

Thought questions:
Suppose you don't sell but transferred assets to another investment vehicle?
If you do transfer (purchase) annuity, what advantages would it give you over the previous vehicle?
Are the purchase cost and fees worth the transfer? Or is keeping the existing investment vehicle better?
If the market goes UP, what happens in the new vehicle? Old vehicle?
If the market goes DOWN, what happens in the new vehicle? Old vehicle?
Whole bunch of purchase questions...

[LongPrime]

JPatrick= "But when those portfolios got chopped in half, there were some advivors who correctly stated--STOP!!! DON'T SELL AT THE BOTTOM..STAY THE COURSE AND BUY MORE LIKE THE BIG KIDS DO."

Funny story: I have a relative who is in Private Banking, with a TARP bank. In 2007 (may be 2008) bank was in trouble and needed to recapitalize. Bank somehow convinced some big private investors and sovereign wealth funds to hold existing shares in Bank but also to invest additional money to buy shares at substantial discount to the $35 share price. Shares dropped to a tenth of the purchase price and remains there today.

DS decided to sell his shares remaining in his UGMA and thus captures the 8x capital gains (was 15x a year earlier). I decided to hold shares and have suffered 10x loss and unfortunately in a tIRA.

Lessons?

[travelover]

Quote:

Originally Posted by LongPrime ..........Lessons?

Yea, have a diverse portfolio, hold it for the long run - don't panic and sell in a downturn, stay away from annuity salesmen.

[JPatrick]

Quote:

Originally Posted by LongPrime Lessons?

Yes, what Travelover said, and I'll add..
*Don't put lotsa eggs in one basket (sorta like diversify)
*No one out smarts Mr Market for long.

[LongPrime]

I used to believe in that, too. Still do but with hedges.

[ERD50]

Quote:

Originally Posted by LongPrime I used to believe in that, too. Still do but with hedges.

Tell me about your hedges. I've used them short term and for specific events, but they are a drag on the portfolio for long term use. IMO, the best 'hedge' is to lower your equity AA.

-ERD50

[aja8888]

Quote:

Originally Posted by LongPrime Lessons?

Lessons, yes, you should have bought some real estate when it went in the tank as that was a no brainer.

[samclem]

Quote:

Originally Posted by LongPrime Lessons?

Yep--buy the market, or at least significant hunks of it. And do it cheaply. Don't time the market, just rebalance. Stay away from annuity salesmen, sellers of whole life insurance, and financial advisors who get paid by anyone other than the client or who work for a % of AUM.

[Richard4444]

I plan on purchasing and laddering some SPIAs with a portion of my portfolio that has no need of a financial legacy. Insurance, not investment. I can live with that easily.

[samclem]

Quote:

Originally Posted by Richard4444 I plan on purchasing and laddering some SPIAs with a portion of my portfolio that has no need of a financial legacy. Insurance, not investment. I can live with that easily.

An SPIA can make sense, especially if interest rates are attractive, if the investor is older, if the retiree's portfolio/living expenses require annual withdrawals above 4% (Otar's "Red Zone), if a person has few other guaranteed steady income streams (SS, pension, etc), if inflation-protected options can be had at reasonable prices, etc.